The tale of two ownership models – one old and one new. In this blog, we unpack the differences between the two and the impact of them in turn, given the recent proposals to re-vamp the choices of property ownership in the UK.

At this current stage we have three main types of ownership: leasehold, freehold and commonhold. Due to what the government call a rise in issues with leasehold ownership, the Labour Government published a White Paper on 19 March 2025 proposing to ensure that commonhold becomes the default tenure, replacing the current system of leasehold ownership. In their words, it is a radical improvement on the option of leasehold ownership.

Now, what is commonhold?

The White Paper describes this as a form of freehold property ownership which enables individual properties within a building or estate to be owned outright, with owners of those properties also having a share in the ownership and management of the building/estate’s common areas. This is not a new concept of ownership; the Commonhold and Leasehold Reform Act 2002 took a positive step in the attempts of modernising the property system. The Act established commonhold as an alternative to leasehold ownership, allowing individual owners to have the benefits of freehold ownership, whilst being collectively responsible for shared areas in their building/estate. However this form of ownership did not take as well as the Government hoped.

Now, the government is looking to take this one step further re-introducing commonhold and replacing leasehold ownership entirely. The government is planning to introduce new flexibilities to commonhold, allowing separated services and costs, meaning that individuals may only pay for the services they actually use and benefit from. This is a contrast to leasehold tenure where a leaseholder will typically pay a managing agent a service charge or maintenance fee to carry out specific services on their behalf. There will be further flexible rights for developers in regard to building and selling commonhold properties, with the hopes of opening up commonhold to a wider range of customers.

What does this mean for the existing system?

The existing system of leasehold tenure does provide its benefits. For example, it is a widely understood system that is well-supported. It is also a common form of ownership with the handling of major maintenance works being managed and undertaken by the freehold owner, affording the leaseholders of the individual properties less direct management and maintenance duties. However, with the cost of living and prices rising, ground rents and service charges can increase heavily. Additionally, a freeholder may make decisions without direct consultation of the leaseholders within the shared property.

It is currently possible to convert a leasehold interest into a commonhold interest, but it requires full consent from every party involved: the freeholder, leaseholder and every mortgage lender (if applicable). This can be an expensive process, meaning it can single out leaseholders who may not be able to afford the change. The Law Commission has made seventeen recommendations to improve the conversion process, including to allow for conversion without unanimous consent. The government has proposed for this process to instead mirror that for enfranchisement, where the consent threshold is fifty percent. Existing leaseholders will have the choice to convert to commonhold if this bill goes through.

The exact impact on leaseholders remains to be seen. Further consultations in the parliamentary process will hopefully provide further clarity as to how this shall exactly be rolled out.

Please note that the contents of this blog are intended as general information only, and do not constitute legal advice. If you are looking for legal advice on this subject, please contact one of our team.